Beijing wins 2008 Olympic Games

AllenWan

MOSCOW (CBS.MW) -- Beijing was awarded the 2008 Olympics on Friday, allowing the world's most populous nation to host the Games for its first time despite international criticism of its human rights record.

China's capital city beat back a strong challenge by rival bidder Toronto, the second-biggest vote getter, and third-place finisher Paris, both of which already had much of the infrastructure to host an event of this magnitude, and are free of the risks that a China bid may entail.

Meeting in Moscow, the International Olympic Committee awarded China the Games on the second round of a secret ballot, with Beijing winning 56 votes. Toronto got 22 votes, Paris had 18, and Istanbul 9. Osaka, Japan, was eliminated the first round.

But Beijing had two of the most important ingredients on its side -- money and politics.

Unlike its controversial bid in 1993 to host the 2000 Summer Olympics that was lost to Sydney by two votes, Beijing decided to take a low-key approach this time around, stressing economic opportunities rather than adopting a moralistic tone.

Moreover, Beijing had the support of its most-noted critics, such as Taiwan and Tibet's spiritual leader the Dalai Lama. And the United States, which could have been a thorn in its plans, took no sides.

Canada and France both have hosted summer Games in the past.

Even with its considerable influence, the U.S. would have had trouble finding enough delegates to join the handful of American members on the IOC voting bloc. Moreover, it risked alienating ordinary Chinese and reigniting the anti-American sentiment seen during the accidental bombing of the Chinese embassy in Belgrade and the Hainan plane incident.

It's another seven long years before Beijing would actually get to host the event -- enough time for improvements in its human rights record as its critics will come to expect.

"They are going to have their best foot forward for the next eight years ..." predicted Bob Kapp, head of the United States-China Business Council, a group of U.S. companies engaged in trade and investment in China.

But hope that China will mend fences with archrival Taiwan -- let alone stage events jointly -- may be too much to ask. "The Olympics alone won't be the 'invisible shield' protecting human rights activists or Taiwan," Kapp said.

But in explaining why the U.S. remained neutral, a senior State Department official said that awarding the Games to China might give "a powerful but intangible incentive" to improve its human rights and exercise restraint towards archrival Taiwan.

Nicholas Lardy, a China expert at the Brookings Institution, concurs. "Underlying the thinking of the executive branch is that we're not going to see an invasion of Taiwan and an improvement in human rights over the next several years."

Boost for China-related shares

Perhaps predictably, investors quickly bid higher the shares of a handful of China-based companies, all traded on Nasdaq, that do business in Internet and data communications services.

The leader was Chinadotcom
CHINA, -0.31%
shares of which advanced more than 30 percent in a reflection of investors' belief that the Hong Kong-based company will have a big hand in relaying information on the Games to the outside world.

Chinadotcom's shares traded at $3.90 in recent action, up 93 cents on the session.

What's in it for multinationals?

Whereas foreign companies are hoping that a China Olympics will keep in check the government's worst impulses, it's open markets and economic opportunity they seek.

With economies crawling along in the West, the multinationals are looking at China as a crucial market with its annual growth rate of around 8 percent. An Olympics-related spending spree would allow them to unload the inventories of telecom equipment, wireless devices and other infrastructural equipment they built up during the late-1990s economic boom.

In return, they're hoping to grab a piece of the building boom that China is going to have to undertake in order to get up to speed. Beijing alone plans to spend an estimated $20 billion on building 22 new stadiums, gyms and related infrastructure, and cleaning up the environment.

There's also the promise of sponsorship. With China's accession to the World Trade Organization imminent, it's smart to get the name out as the country opens up its industries to foreign competition.

"An awful lot of money would be spent in Beijing if it gets the games," said Kapp. "China will undertake the complete urban renewal of Beijing at great expense to make a world showplace. They'll have to remove whole industries because they have a horrible pollution problem." He said this will continue even if they don't get the bid, but not to the same extent.

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